English and French Colonies But, Even Today, Trade Volumes Between Adjacent Countries Are Still Often Remarkably Small
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Report No. 49193 Public Disclosure Authorized AFRICA INFRASTRUCTURE COUNTRY DIAGNOSTIC Railways in Public Disclosure Authorized Sub-Saharan Africa June 2009 Sustainable Development Public Disclosure Authorized Africa Region Public Disclosure Authorized Document of the World Bank Vice President: Obiageli Katryn Ezekwesili Sector Director: Inger Andersen Task Team Leader: Vivien Foster RAILWAYS IN SSA TABLE OF CONTENTS 1 Introduction ........................................................................................................................ 1 2 The Railways ....................................................................................................................... 4 2.1 The Networks ....................................................................................................... 4 2.2 Traffic Density ...................................................................................................... 7 2.3 Infrastructure Condition......................................................................................... 8 2.4 Network Expansion Proposals ............................................................................... 11 3 Infrastructure Investment and Maintenance .......................................................................... 13 3.1 Overview ........................................................................................................... 13 3.2 Infrastructure..................................................................................................... 14 3.3 Economic Evaluation of Infrastructure Investment .................................................. 16 3.4 Economics of Mechanized Track Maintenance ......................................................... 20 3.5 Indicative Investment Needs in SSA Railways......................................................... 21 4 The Market........................................................................................................................ 23 4.1 Overview ........................................................................................................... 23 4.2 Traffic Trends ..................................................................................................... 25 4.3 Passenger Traffic ................................................................................................ 27 4.4 Freight Traffic..................................................................................................... 28 4.5 Competition ....................................................................................................... 33 4.6 Freight services .................................................................................................. 34 5 Institutional Arrangements.................................................................................................. 39 5.1 Overview ........................................................................................................... 39 5.2 Legal and regulatory framework ........................................................................... 39 5.3 Governance and management of State-owned railways ........................................... 40 5.4 Structure of concessions ...................................................................................... 41 5.5 Concessionaires.................................................................................................. 45 6 Operational Performance..................................................................................................... 47 6.1 Overview ........................................................................................................... 47 6.2 Labor productivity............................................................................................... 47 6.3 Rollingstock productivity ...................................................................................... 48 6.4 Impact of concessioning on productivity ................................................................ 52 6.5 Service quality.................................................................................................... 54 7 Financial Performance......................................................................................................... 55 7.1 Revenue and Cost Structure................................................................................. 55 7.2 Financial results.................................................................................................. 58 7.3 Passenger services.............................................................................................. 58 7.4 Freight services .................................................................................................. 61 7.5 Concession financing issues ................................................................................. 63 8 The Way Ahead.................................................................................................................. 67 8.1 Introduction ....................................................................................................... 67 8.2 Concession performance ...................................................................................... 68 8.3 Four key issues................................................................................................... 69 i RAILWAYS IN SSA NOTE This report contains a number of data tables summarizing railway performance, which reflect the data which was available as at December 2008. While in several cases detailed information is available on a regular basis following privatization and concessioning, in a number of others there is far less authoritative information available compared to previously. This is due to a combination of factors: the replacement of detailed annual reports of public operators by summary reports of companies which are often diversified; the limited reporting requirements in many concessions (which even then are often only partially complied with), and the emphasis by some concessionaires on commercial confidentiality. As a result, information in many cases has to be gleaned from a variety of sources, some of which are less reliable than others. In order to provide a guide to the reliability of the information in this report, the following convention has been adopted: Where information is simply stated, it has been directly sourced from official reports or concessionaire data Where information is qualified by “it is reported that,” it has been sourced indirectly from third- party reports, the press or the internet Where information is qualified by “it is understood that,” it has been sourced from unattributable third parties. The peer reviewers and World Bank staff, particularly Pierre Pozzo di Borgo and James Leigland provided valuable contributions and comments concerning many of the transactions. However, all responsibility for the material remains that of the author. ii RAILWAYS IN SSA EXECUTIVE SUMMARY The role of rail in Africa has changed greatly in the last thirty years and is likely to change just as much in the next thirty. Thirty years ago, many of the railway systems were carrying a high share of their country’s traffic, either because competing road transport had poor infrastructure or faced restrictive regulations, or because rail customers were established businesses who were locked into rail through physical connections or (if they were parastatals) through policies which directed them towards the use of a fellow parastatal. During the intervening period, both the economies in general, and transport in particular, have become liberalized. Coupled with the general improvement in road infrastructure this has led to much stronger competition and, generally, a significant loss of their previous market by railways. Railways in sub-Saharan Africa (SSA), as in much of the rest of the world, were slow to respond to these changes. Very few governments, other than South Africa, invested significant sums of their own, or their own Government’s funds, in rehabilitating and renewing infrastructure. Such investment as there was, other than for purely mineral lines, usually came from bilateral and multilateral donors. As this typically arrived after the damage was done, and in some cases not at all, the continent is full of railways that can best be described as “walking wounded.” Whether they can be patched up by the appropriate investment medicine and a new exercise regime under a concessionaire is a moot point. In some cases, help never arrived and the railway has collapsed; this has been their fate in Guinea, Sierra Leone, the north-east network in DRC and some of the Angola short lines. Railways have also suffered severely during the various wars and conflicts that have occurred during this period: much of the Mozambican central and northern networks, as well as railways in Angola, Ethiopia, Eritrea, Congo Brazzaville and Ivory Coast have either been damaged or have been unable to operate for long periods because of civil unrest, in some cases up to twenty years. Although it is an understandable desire of governments to reinstate networks in such cases, this is often extremely expensive and it is legitimate to question whether the transport solutions of one hundred years ago are still the most economical solution. Much is often made of the inherent lower cost of rail as compared to road. This is certainly true where minerals have to be transported from a rail-connected mine to a rail-connected port but